IDEAS home Printed from https://ideas.repec.org/p/cdl/econwp/qt9jt389nb.html
   My bibliography  Save this paper

Merger Simulation: A Simplified Approach with New Applications

Author

Listed:
  • Epstein, Roy J.
  • Rubinfeld, Daniel L.

Abstract

Merger simulation is growing in importance as a tool to evaluate the unilateral competitive effects of mergers. This paper offers a relatively non-technical description of the principles of merger simulation. In addition, it introduces PCAIDS, a new and highly flexible "calibrated-demand" merger simulation methodology that is based on a simplified version of AIDS. PCAIDS can be implemented using market shares and two price elasticities; scanner or transaction-level data are not required. The paper offers some applications of merger simulation with PCAIDS that include comparisons with other simulation models. It also shows how PCAIDS can be applied to the analysis of efficiencies, divestiture, and product repositioning/entry. Finally, the paper offers an analysis of the Merger Guidelines safeharbors. A detailed mathematical appendix is included

Suggested Citation

  • Epstein, Roy J. & Rubinfeld, Daniel L., 2001. "Merger Simulation: A Simplified Approach with New Applications," Department of Economics, Working Paper Series qt9jt389nb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  • Handle: RePEc:cdl:econwp:qt9jt389nb
    as

    Download full text from publisher

    File URL: http://www.escholarship.org/uc/item/9jt389nb.pdf;origin=repeccitec
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kaplow, Louis & Shapiro, Carl, 2007. "Antitrust," Handbook of Law and Economics, Elsevier.
    2. Herrera Saavedra, Juan Pablo & Sánchez Navarro, Dennis, 2013. "Análisis de los efectos explotativos en integraciones empresariales a partir del modelo de Cournot: el caso de mercados con bienes homogéneos
      [Analysis of the exploitative effects of a merger based
      ," MPRA Paper 52688, University Library of Munich, Germany.
    3. Kai Hüschelrath, 2009. "Detection Of Anticompetitive Horizontal Mergers," Journal of Competition Law and Economics, Oxford University Press, vol. 5(4), pages 683-721.
    4. Gregory Swinand & Hugh Hennessy, 2014. "Estimating postal demand elasticities using the PCAIDS method," Chapters,in: The Role of the Postal and Delivery Sector in a Digital Age, chapter 5, pages 65-74 Edward Elgar Publishing.
    5. Hüschelrath, Kai, 2009. "Methodologische Grundlagen einer Evaluation von Wettbewerbspolitik," ZEW Discussion Papers 09-084, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Oliver Budzinski & Isabel Ruhmer, 2010. "Merger Simulation In Competition Policy: A Survey," Journal of Competition Law and Economics, Oxford University Press, vol. 6(2), pages 277-319.
    7. repec:bla:jindec:v:64:y:2016:i:4:p:683-709 is not listed on IDEAS
    8. Stenborg, Markku, 2004. "Are There Biases in the Market Definition Procedure?," Discussion Papers 903, The Research Institute of the Finnish Economy.
    9. Jerome Foncel & Marc Ivaldi & Jrisy Motis, 2008. "An Econometric Workbench for Comparing the Substantive and Dominance Tests in Horizontal Merger Analysis," Working Papers 0833, University of Crete, Department of Economics.
    10. Peter Davis & Pasquale Schiraldi, 2014. "The flexible coefficient multinomial logit (FC-MNL) model of demand for differentiated products," RAND Journal of Economics, RAND Corporation, vol. 45(1), pages 32-63, March.
    11. Lundmark, Robert & Wårell, Linda, 2008. "Horizontal mergers in the iron ore industry--An application of PCAIDS," Resources Policy, Elsevier, vol. 33(3), pages 129-141, September.
    12. Bush, C. Anthony, 2014. "Bridging the gap between horizontal and vertical merger simulation: Modifications and extensions of PCAID," Economics Discussion Papers 2014-33, Kiel Institute for the World Economy (IfW).
    13. Alena Zemplinerova, 2010. "Competition policy and economic analysis: What can we learn from firm and industry data?," CERGE-EI Books, The Center for Economic Research and Graduate Education - Economics Institute, Prague, edition 1, number b07, November.
    14. Daljord, Øystein & Sørgard, Lars, 2011. "Single-product versus uniform SSNIPs," International Review of Law and Economics, Elsevier, vol. 31(2), pages 142-146, June.
    15. repec:eee:indorg:v:52:y:2017:i:c:p:216-247 is not listed on IDEAS
    16. Björnerstedt, Jonas & Verboven, Frank, 2012. "Does Merger Simulation Work? A "Natural Experiment" in the Swedish Analgesics Market Market," CEPR Discussion Papers 9027, C.E.P.R. Discussion Papers.
    17. Nisvan Erkal & Daniel Piccinin, 2006. "Horizontal Mergers with Free Entry in Differentiated Oligopolies," Department of Economics - Working Papers Series 976, The University of Melbourne.
    18. Doose, Anna Maria, 2013. "Methods for calculating cartel damages: A survey," Ilmenau Economics Discussion Papers 83, Ilmenau University of Technology, Institute of Economics.
    19. Gary Gorton & Matthias Kahl & Richard Rosen, 2005. "Eat or Be Eaten: A Theory of Mergers and Merger Waves," NBER Working Papers 11364, National Bureau of Economic Research, Inc.
    20. Miller, Nathan H. & Remer, Marc & Ryan, Conor & Sheu, Gloria, 2017. "Upward pricing pressure as a predictor of merger price effects," International Journal of Industrial Organization, Elsevier, vol. 52(C), pages 216-247.
    21. Marie Goppelsroeder & Maarten Pieter Schinkel & Jan Tuinstra, 2006. "Quantifying the Scope for Efficiency Defense in Merger Control: The Werden-Froeb-Index," Tinbergen Institute Discussion Papers 06-074/1, Tinbergen Institute.
    22. Richard Dagen & Daniel Richards, 2006. "Merger Theory and Evidence: The Baby-Food Case Reconsidered," Discussion Papers Series, Department of Economics, Tufts University 0602, Department of Economics, Tufts University.
    23. Juan Pablo Herrera Saavedra & Dennis Sánchez Navarro, 2016. "Efectos de integraciones de firmas en mercados de bienes homogéneos," REVISTA FINANZAS Y POLÍTICA ECONÓMICA, UNIVERSIDAD CATOLICA DE COLOMBIA, vol. 8(1), pages 157-164, March.
    24. Oliver Budzinski, 2008. "A Note on Competing Merger Simulation Models in Antitrust Cases: Can the Best Be Identified?," MAGKS Papers on Economics 200803, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdl:econwp:qt9jt389nb. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Lisa Schiff). General contact details of provider: http://edirc.repec.org/data/ibbrkus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.